3G In. 4:10 Assignment M B 2020 (1) Guidelines for preparation of Assignments 1 Attempt all questions 2 The assignments constitute the continuous component of the evaluation process and have 25% weightage in the final grading 1. Assignments should be submitted through Moodic on or before the last date mentioned above. Prepare the Assignments in handwritten mode and in the assignment book itself, Use Photocopies Scans for analytical problem solving. Copying of assignments from friends word by word copies of downloaded materials and without proper source information is not acceptable. Those assignments will be awarded zero grades Questions If the interest rate is 10%, what is the present value of a security that pays you OMR1,400 next year, OMR 1.450 the year after, and OMR 1.540 the year after that? Suppose you purchase a five-year, 15 percent coupon bond (pand annually) that is priced to yield 9 percent. The face value of the bond is $1,000. Show that the duration of this bond is equal to four years What is the yield 10 maturity (YTM) on a simple loan for OMR2,000 that requires a repayment of OMR20,000 in five years' time? Suppose you purchase a five-year, 12 percent coupon bond (pand annually) that is priced to yield 10 percent. The face value of the bond is $1,000. Calculate the maturity of the bond. Suppose you are the manager of a bank that has OMR55 million of fixed-rate assets, OMR45 million of rate sensitive assets, OMR45 million of fixed-rate liabilities and OMR 50 million of rate-sensitive liabilities .Conduct a gap analysis for the bank, and show what will happen to bank profits if interest rates rise from 10 to 18 percentage points. What actions could you take to reduce the bank's interest-rate risk? Consider the following balance sheet for Xappos Savings, Inc. (in millions): LA 10 | 3G li.. 4:10 Assignment M B 2020 (1) value of the bond is 31. Show that the duration of this bond is equal to four years What is the yield to maturity (YTM) on a simple loan for OMR2,000 that requires a repayment of OMR20,000 in five years time? Suppose you purchase a five-year, 12 percent coupon bond (pand annually that is priced to yield 10 percent. The face value of the bond is $1,000. Calculate the maturity of the bond Suppose you are the manager of a bank that has OMR55 million of fixed-rate assets, OMR45 million of sate sensitive assets, OMR45 million of fixed-rate liabilities and OMR50 million of rate-sensitive liabilities Conduct a gap analysis for the bank, and show what will happen to bank profits if interest rates rise from 10 to 18 percentage points What actions could you take to reduce the bank's interest-rate risk? Consider the following balance sheet for Xappos Savings, Inc. (in millions Team What is Xappos's expected net interest income at year end? What will net interest income be at year-end if interest rates rise by 4 percent? 7. A bank has the following balance sheet: Risteve 1999 Suppose interest rates fall such that the average yield on rate-sensitive assets decreases by 15 basis points and the average yield on tate-sensitive liabilities decreases by 5 basis points a Calculate the bank's CGAP and gap ratio
